The Ramsay Health Care Limited (ASX: RHC) share price is trading higher on Tuesday.
In morning trade, the private hospital operator's shares are up slightly to $63.67.
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Why is the Ramsay share price on the move?
The Ramsay share price is pushing higher on Tuesday despite the release of a disappointing update on its takeover of Spire Healthcare in the United Kingdom.
Earlier this month, Ramsay revealed that it had increased its offer to acquire Spire to 250 pence per share in cash. This compares to its previous offer of 240 pence per share. This values Spire's entire issued and to be issued share capital at approximately GBP1,041 million (A$1,900 million) on a fully diluted basis.
Unfortunately, this increase has not been enough to sway Spire's shareholders.
This morning Ramsay advised that Spire shareholders have gathered to vote on resolutions to approve and implement the scheme of arrangement. However, with the necessary majority of votes required to pass all of the resolutions not achieved, the proposed acquisition will not proceed.
Instead, Ramsay will now focus on strengthening its existing business platform. It intends to do this by utilising its strong balance sheet and cashflows to generate growth through investment in organic and strategic expansion opportunities that optimise its facilities and global footprint.
Given the relatively positive performance of the Ramsay share price today, the market may be happier with this alternative plan.
"Disappointed"
Ramsay's CEO and Managing Director, Craig McNally, revealed that the company was disappointed with the news.
He said: "Given the strong strategic fit and the support of Spire's board and major shareholder, we are disappointed not to be in a position to proceed with the Spire acquisition, however we believe its important to maintain our financial discipline and focus on long term value creation for shareholders."
"We remain committed to delivering best in class healthcare and high-quality patient outcomes in the UK through investing in clinical excellence, working closely with our doctors and clinicians and leveraging our expertise across the Ramsay Group. We see a significant growth opportunity for Ramsay in the UK market where we have a strong, established relationship with the NHS and the ability to increase our private patient presence," the CEO added.
Nevertheless, Mr McNally remains positive on the future despite this setback.
He concluded: "We stand ready to provide support in tackling the significant increase in elective surgery waiting lists in both the private and public systems and are already seeing growth in the mix of our private insurance volumes. Our strong balance sheet and cashflows position us well to deliver on our long-term strategy. We will continue to look for opportunities to invest and modernise our facilities and footprint in all regions and to leverage the scale of our world class hospital network. We have a significant pipeline of brownfield and greenfield projects in Australia and will continue to investigate adjacencies in all our markets to create an integrated patient centric business platform."
The Ramsay share price is trading broadly flat in 2021.
